Health industry groups pledge to reduce spending; some health advocates express skepticism about plan

As President Obama on Monday met with health care industry groups regarding their pledge to reduce $2 trillion in expected health care spending increases over the next 10 years, many health care advocates expressed skepticism about the promise, the Hartford Courant reports (Levick, Hartford Courant, 5/12).

The industry groups -- which represent drugmakers, health insurers, hospitals, labor representatives, medical device makers and physicians -- in a letter sent to Obama on Sunday wrote, "We will do our part to achieve your administration's goal of decreasing by 1.5 percentage points the annual health care spending growth rate. ... This represents more than a 20% reduction in the projected rate of growth." The letter pointed toward lowering administrative costs, reducing hospitalization rates, improving management of chronic diseases, increasing hospital efficiency and expanding the use of health information technology as methods of reducing health care spending. However, the letter -- which was signed by the American Medical Association, the American Hospital Association, Pharmaceutical Research and Manufacturers of America, the Advanced Medical Technology Association, America's Health Insurance Plans and the Service Employees International Union -- did not elaborate on what specific measures the groups would take to achieve such reductions (Kaiser Daily Health Policy Report, 5/11).

According to the New York Times, the groups remain vague about how they would reduce spending. In addition, the Times reports that none of the potential savings are guaranteed nor are they enforceable; therefore, budget rules could prevent Congress from using the savings to pay for new initiatives to cover the uninsured. According to the Times, "At this point, cost control is little more than a shared aspiration" (Pear, New York Times, 5/12).

Many health care advocates voiced concern that the reason why leading health care industry groups are taking such strides is to influence health care overhaul legislation (Colliver, San Francisco Chronicle, 5/12). Ellen Andrews, executive director of the Connecticut Health Policy Project, said, "They're trying to use this (savings pledge) to head off real reform and protect their turf." Andrews also expressed concern that insurers would put more pressure on which types of care would be covered in order to protect profits. "That's the way they've always done it in the past," she said, adding, "It would require a huge shift in corporate culture to do it any other way" (Hartford Courant, 5/12).

Drew Altman, president and CEO of the Kaiser Family Foundation, said, "Neither managed care, nor wage and price controls, nor regulation, nor voluntary action nor market competition has had a lasting impact on our nation's health care costs," adding, "Reformers should not overpromise" (New York Times, 5/12).

Anthony Wright, executive director of Health Access California, said, "There are a lot of people who are appropriately skeptical, but even the fact the health care industry feels like they need to come to the table suggests there's a seriousness and urgency about reform we haven't seen in the past." He added, "Even if some of those savings can be realized, that's a huge step not only for finding the money to cover the uninsured, but to ultimately bring down the cost of care" (San Francisco Chronicle, 5/12).

June Deadline

HHS Secretary Kathleen Sebelius said Monday that Obama has given the health care industry groups until June 1 to submit specific recommendations on how they plan to reduce health care spending, CQ HealthBeat reports. Sebelius said that the industry groups "are not going to wait for legislation to be passed, but feel they can begin down this path today." She added that Obama has indicated he wants "involvement, help and support on the legislative side of the puzzle" from the groups, in addition to having them rein in costs (Norman, CQ HealthBeat, 5/12). Robert Zirkelbach, a spokesperson for AHIP, one of the groups represented at the meeting, said that the groups will put together a "specific road map" on how to reach their cost-reduction goal (Hartford Courant, 5/12).

Enforcement Concerns

Many people have voiced concerns over the lack of enforcement mechanisms for meeting such savings goals, the AP/Philadelphia Inquirer reports. House Minority Leader John Boehner (R-Ohio) criticized the meeting, saying that the "announcement promises savings with no concrete plan to achieve them and no enforcement mechanism if they don't" (Alonso-Zaldivar, AP/Philadelphia Inquirer, 5/12).

Ezra Klein of the American Prospect wrote Monday, "They have not set down enforcement mechanisms. Put simply, they are, at this juncture, helping the White House with messaging," but "that doesn't mean they will help the White House with legislation" (Gerstein, Politico, 5/11) Robert Blendon, a health care policy expert and pollster at Harvard University said, "The history of voluntary agreements is very poor in terms of their actual implementation," adding that "for a major health reform to happen, it is going to require an agreement in legislation on how it is going to work, and that may be tougher to achieve" (Budoff Brown, Politico, 5/12).

Reaction

Obama called Monday's meeting a "historic day, a watershed event," noting that the meeting "might not have been held just a few years ago," but that what has "brought us all together today is a recognition that we can't continue down the same dangerous road we've been traveling for so many years" (Politico, 5/11). Obama added that what the health care industry groups are doing "is complementary to and is going to be completely compatible with a strong, aggressive effort to move health care reform though" Congress (Armstrong, CQ Today, 5/11).

Senate Finance Committee ranking member Chuck Grassley (R-Iowa) called the pledge a "move in the right direction" but warned that lawmakers should not rely on the projected savings until the industry groups "put concrete proposals on paper" (Mulligan, Providence Journal, 5/12). Sen. Charles Schumer (D-N.Y.) said, "This commitment to cost-cutting is a good faith gesture by the health care industry, but it does not mitigate the need for a public plan option in the upcoming reform bill" (Werner, AP/Boston Globe, 5/12).

The Obama administration in a document released on Monday outlined some specific proposals, which included simplifying billing procedures, investing in preventive care and offering incentives to hospitals that reduce readmission rates. However, Robert Reischauer, former director of the CBO, said, "It would be difficult to wring 1.5 percentage points out of this list of proposals" (Connolly/Hilzenrath, Washington Post, 5/12).

Opposition

Monday's announcement that health care stakeholders will work with Obama to overhaul the health care system shows that "opposition to health care reform is rapidly evaporating," Politico reports. AHA, AHIP, AMA and the U.S. Chamber of Commerce all worked to defeat the Clinton administration's effort to create a national health care system. However, they are now "busy negotiating the details" of the Obama plan "so they can help shape the law, which they now consider a virtual certainty," Politico reports (Allen, Politico, 5/11).

Senate Finance Committee Releases Public Plan Options

Senate Finance Committee Chair Max Baucus (D-Mont.) and ranking member Grassley on Monday released proposals for a public health insurance option and a requirement that all U.S. residents have health coverage, CQ HealthBeat reports (CQ HealthBeat, 5/12). The proposals in the 63-page "policy options" paper released Monday include three options for a public plan. One would be similar to Medicare; another would call for a third-party administrator outside of HHS to oversee and regulate the plan; and a third would allow states to decide whether to create a public option. The paper also gives the option of not including a public plan and instead relying on a "reformed and well-regulated private market" (Budoff Brown, Politico, 5/11). The paper also proposed employer and individual requirements for insurance. The individual requirement would be enforced through a tax on a percentage of the premium for the cheapest coverage offered through an insurance exchange (Edney, CongressDaily, 5/12). The report stated in the introduction, "While these proposed options are jointly offered for discussion, not all the options in this document have the support of" both Baucus and Grassley (Politico, 5/11).

Broadcast Coverage

• American Public Media's "Marketplace" on Monday reported on the meeting between Obama and the various health care group representatives. The segment included comments from Obama; James Rohack, president-elect of the American Medical Association; Henry Aaron; a reform advocate at the Brookings Institution; and Ron Pollack, executive director of Families USA (Dimsdale, "Marketplace," American Public Media, 5/11). "Marketplace Morning Report" on Monday also included a discussion on details of the health care industry's pledge to reduce health care spending over the next decade by $2 trillion between host Steve Chiotakis and economic correspondent Jeremy Hobson (Chiotakis, "Marketplace Morning Report," American Public Media, 5/11).
• CNN's "The Situation Room" on Monday reported on the meeting. The segment included analysis from correspondent Jill Dougherty, comments from Conservatives for Patients' Rights Chair Rick Scott, and an interview with HHS Secretary Kathleen Sebelius (Blitzer, "The Situation Room," CNN, 5/11). A transcript of the segment is available online.
• MSNBC's "The Ed Show" on Monday reported on the budget reconciliation option for health care reform. The segment included a discussion with Ezra Klein, associate editor for the American Prospect (O'Donnell, "The Ed Show," MSNBC, 5/11).
• NPR's "All Things Considered" on Monday reported on the White House meeting. The segment included comments from Obama and an interview with White House Office of Health Reform Director Nancy-Ann DeParle (Siegel, "All Things Considered," NPR, 5/11). The show also included a discussion between host Michele Norris and health policy correspondent Julie Rovner on the meeting and recent developments in efforts to overhaul the U.S. health care system (Rovner/Norris, "All Things Considered," NPR, 5/11).
• PRI's "The World" on Monday reported on the White House meeting. The segment included comments from Obama and a discussion between host Lisa Mullins and Karen Davis, president of the Commonwealth Fund (Mullins, "The World," PRI, 5/11).
• WAMU's "The Diane Rehm Show" on Monday included a discussion of the latest efforts to meet time lines set by Congress and the White House to overhaul the health care system and the proposals to offer a public insurance option. The discussion panel included Russell Mokhiber, founder of Single Payer Action; Len Nichols, director of the health policy program at the New America Foundation; Rovner; and Stuart Butler; vice president for domestic and economic policy studies at the Heritage Foundation (Roberts, "The Diane Rehm Show," WAMU, 5/11).